RBI Likely to Hold Rates Through Fiscal: ICRA

Business

Religare

Posted By: Religare

Updated: Wednesday, November 5, 2014, 9:27 [IST]

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Notwithstanding moderation in inflation, the Reserve Bank is likely to keep status quo on the policy rates this fiscal to check price rise expectations, says a report. "We expect the central bank to stick to a firm anti-inflationary stance over the remainder of the current fiscal to rein in inflation expectations and impart credibility to its targets," ICRA Ratings chief economist Aditi Nayar said in a report.

She, however, expects the apex bank to begin a rate-easing cycle in the first quarter of the next fiscal, with repo rate cuts of up to 50 basis points. Reserve Bank Governor Raghuram Rajan will announce the fifth bi-monthly monetary policy on December 2. The rating agency sees CPI inflation in January 2015 to be well below the target of 8 percent as per the glide path announced by the RBI, despite base effect waning after this month. Retail inflation eased to 6.46 percent in September, lowest since January 2012, from 7.73 percent in August.